Home Money Management: A Budgeting and Planning Solution

Home money management can seem almost impossible to accomplish if you find yourself running out of money before the end of each month. But unless you learn to manage the money you have now, you will likely never have any more--at least you won't feel like you do.

The following basic home money management tip is first thing you can do to get your personal and/or family finances under control:

Keep track of where and how you are currently spending your money for 2-4 weeks. Use your bank statements and credit card statements, or better yet, keep a running tab. No purchase is too small to note.

After you have gathered your data, look for any surprises. Are you spending more than you thought you were for lunches out on the town? What about your too-frequent trips to the mall? These are things you can immediately cut for immediate results. You could put that money away...

But there is actually a better way to proceed with your home money management plan. Now that you have a little more breathing room, it is time to put some planning into your spending. All of your spending. But not in the micro-managing, anal retentive way that you have come to know and love (I mean hate, of course).

Here are the steps to our Budgeting and Planning Solution for Home Money Management:

1. Organize your finances. Gather all of your bills for the month together. This is made a lot easier when you have them all together in one place (This really is an important step. For more help, visit Financialprosperity-Organize.com ). Then, on a blank piece of paper, list all of them, along with the date they are due.

2. Add automatic deductions and other regularly occurring expenses to your list along with the date they are typically withdrawn.

3. Label your expenses according to each home money management category described below:

Plan, the category for planning your financial future. This is your golden goose. This includes contributions to your retirement fund, recurring deposits to a money market account or mutual fund, and investments in other wealth building vehicles and passive income streams. It should amount to 10% of your net income (unless you are in debt, in which case, your goose is cooked, at least for the time being. See note below regarding the money management debt program.)

Live, the category for all of your living expenses. It includes your utilities, mortgage payment , groceries, gasoline, dry cleaning, etc. Ideally, spending in this category should not exceed 50%.

Learn, for educating yourself and your family. If you stop learning, you stop growing. Look for seminars about creating wealth, getting out of debt, or smarter investing. We also use this money for dance lessons for the girls, RDI for our son with autism, and to pay off those pesky student loans. You may decide to invest a portion of this money to set up a State 529 Plan or a prepaid college plan for your kids. This is where 10% of your money goes.

Give, for tithing and charitable contributions. You can even go up to a homeless man on the street if you like and make his day. It is your choice how you use this 10%.

Play, for anything you want to do for fun. Movies, dining out, and a day at the spa, all fall into this category. You deserve to use 10% every month. This is hard for some people to do, especially when they are used to saving every last dime, but it provides much needed balance to an otherwise stressful life.

Save, for short term spending. This 10% could include insurance deductibles (which I recommend you save for right away), emergency cash, car repairs, planning for larger household purchases (like automobiles, furniture , and appliances), and travel. You could even use some of this allotment to fund a mission .

4. This next step could be done in one of two ways. You could employ an envelope system of budgeting (or better yet, use jars). Or you could open separate checking accounts and name them for each home money management category.

5. Every time you receive money, divide it up according to the percentages above, depositing each amount into its respective account/envelope/jar.

6. Remember: Keep separate registers (or envelopes) for each account, and use the money only for the purpose for which it is allotted.

7. Set up a time and place to pay bills. If you are paid two times per month, expect to have to do this twice a month. Many companies will allow you to choose your own due date if you ask. If circumstances permit, you may opt to arrange all of your bills to be due around the same time so you only have to pay bills once a month. This is not impossible to do, but if it is too much work, twice a month is a very reasonable compromise. Obviously, if you are paid weekly, you will most likely need to pay bills just as frequently.

8.Using each of the designated accounts, use your web bill pay and/or write a check. Keep track using Quicken or another program, so that you always know how much money you have left in each category.

Note: Make sure you pay your bills on time. Nothing is worse than finding that your interest rate has gone up exponentially because you missed a due date on your credit card. There are other fees associated with paying your bills late as well. Web bill pay makes this easy to do, since it will very often provide e-billing and automatic bill reminders.

9. Make a date with your bank statements to reconcile your accounts. It is better to get this over with all at once. Put the date in the calendar so you do not procrastinate (letting them stack up is not a pretty sight, and you will be less likely to want to go back and catch up later).

10. Stick to this plan, and you are well on your way to financial freedom. You may also find that our personal budgeting strategies will give you more money to put toward your short- and long-term financial goals. Or, if you just need a simpler approach, Budgeting for Dummies may have some answers for you. There are a few free budgeting tools available which you can use to maximize your home money management strategies as well.

Simply Budgets surpasses many consumer products designed to help you maximize your financial well-being. The company which produces it also offers Cash Flow Clinics and Wealth Building seminars, so you can be sure they know what they are doing.

One final note on debt and home money management:

If your debt payments are excessive, you will need to divert about half of your Plan allotment (5% of your income) into a money management debt program . The advantages of doing this are that you will be debt free in a shorter amount of time, save thousands of dollars in interest, and build wealth quickly with the same money you were using to make debt payments.

The other half of your PLAN allotment can be used to fund a number of passive income streams, which ultimately could increase your ability to pay off your debt.

If you are way behind on your payments or just need more support, you might want to consider debt consolidation .

Another great option it to use a "do-it-yourself" debt settlement program . If your credit has been damaged by inaccurate negative reporting, you may want to contact a Credit Consultant with "Rebuild You" .

Well, that about wraps up home money management. Feel free to come back often to make sure you are on the right track with your finances. And don't forget to really have a good time with your FUN money. I mean it!

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